‘We recognised the spirit of the manifesto and the change has been made,’ May said.
Photograph: PA

Theresa May has said she has “absolute faith” in the chancellor, Philip Hammond, a day after he dropped his key budget measure of increasing national insurance rates for the self-employed.

Interviewed by ITV News, the prime minister was asked whether Hammond should have resigned following the U-turn. She said: “I have absolute faith in the chancellor. We made very clear yesterday, he and I, about the tax lock, that we recognised the spirit of the manifesto and the change has been made.”

Philip Hammond defends scrapping national insurance rise for the self-employed

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The decision to drop the changes to national insurance contributions (NICs) came in a letter from Hammond on Wednesday to the Conservative MP Andrew Tyrie, chair of the Treasury select committee.

It followed a revolt by backbench MPs, which was not dampened by May’s announcement a day after the budget last week that any changes would be delayed until the autumn.

Both the Treasury and No 10 insisted the decision, which leaves a £2bn hole in the chancellor’s budget plans over the next five years, had been taken jointly by May and Hammond.

But some MPs insist May ordered her chancellor to drop the plans, fearing that breaking the party’s manifesto pledge to make “no increases in VAT, national insurance contributions or income tax”, would do too much damage to the Conservatives’ reputation.

May agrees to delay legislation over tax rise for self-employed after Tory revolt

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May’s spokesman had said on Wednesday in the wake of the U-turn that the prime minister had full confidence in Hammond.

Class 4 NICs, the rate paid by self-employed people, were due to rise from 9% to 10% next April, and then to 11% in 2019. This move was to narrow the gap with employees, and prevent the tax base being eroded as self-employment became more widespread.

Hammond, who was on Thursday meeting the US Treasury secretary, Steven Mnuchin, for talks in London, used a newspaper column to explain why he had backed down over the measure. He acknowledged the concern about the manifesto promise, despite having only conceded in his letter to Tyrie that the change contravened “the spirit” of the 2015 pledge. “Trust matters in politics,” he wrote in the Sun. “And this Conservative government sets great store in the faith and trust of the British people.”